What's the difference between escrow waiver and escrowed taxes/insurance?

What's the difference between escrow waiver and escrowed taxes and insurance?

You want to know whether your mortgage will include escrow for taxes and insurance, or if you can handle those payments yourself. The difference comes down to who manages and pays your property taxes and homeowners insurance.

With escrowed taxes and insurance, your lender collects extra money each month along with your mortgage payment. The lender holds this money in an escrow account and pays your property taxes and insurance bills when they come due. With an escrow waiver, you pay your mortgage payment to the lender and handle tax and insurance payments directly to the tax collector and insurance company.

Check your Loan Estimate to see which approach your loan includes. Section G shows your monthly payment breakdown, and you'll see if taxes and insurance are included there. Your lender determines escrow requirements based on your loan type, down payment amount, and loan-to-value ratio.

Most conventional loans with less than 20% down require escrow. Government loans like FHA and VA typically require escrow regardless of down payment. Some lenders offer escrow waivers for conventional loans with 20% or more down, though they may charge a small fee. Share your Loan Estimate with your lender and they can walk you through whether escrow waiver options exist for your loan.